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Benchmark Co. analyst Gary Mobley this morning cut his rating on ARM Holdings shares to Hold from Buy, largely on a valuation basis.

The analyst notes that the microprocessor IP licensing company's shares over the past year is up 55%, and now trades at about 50x his FY 2013 non-GAAP EPS forecast of 84 cents. "There is good reason for the positive investor sentiment as ARM is at the epicenter of a secular change in computing," he writes. "This said we believe investor expectations have become a little too bullish."

Mobley notes that investors have gotten used to ARM beating published revenue and profit estimates, and that management's guidance is generally viewed as "vague and ulta conservative." The result, he says, is that whisper estimates creep higher. "Starting with Q4 2012, we can already see how Street expectations have become aggressive," he writes. "The current Q4 consensus revenue estimate is $238.0 million, which is slightly above previous guidance ... We believe ARM will experience a strong Q4 and should report revenue at least in line with consensus. However, we believe whisper expectations for Q4 revenue is ~$240 million." His own estimate is $237 million.